Turkish Economy Minister Kemal Dervis announced on Sunday, June 17, that a $7 billion debt swap will take place, in a move that is aimed at bailing out the severely hit Turkish economy.

Although bids have been received in the amount of $9 billion, the swap will go ahead at the $7 billion level, added Dervis in a press conference. No specifications have been made as to the IMF-backed deal, though it is expected that if bids do not surpass the 3,000 Lira ($2.6 billion) level the deal will be cancelled.

The swap is expected to reduce the treasury's debt burden, as well as help banks cover foreign exchange positions. “The debt swap will have a favorable impact on the public finances and will be beneficial for the treasury and the banks," added Dervis. In addition to the cash crunch that took place in November, the financial turmoil that hit the country in February has led Turkish banks to encounter serious losses as a result of the 40 percent drop in the value of the Turkish currency relative to the dollar. — (MENA Report)